UAE - Mubasher: Residential sale prices in the emirate of Dubai are likely to carry on softening in the remainder of the year by up to 5%, with rental rates slowing by 1% during the third quarter of 2019, according to Chestertons MENA’s Q3-19 Dubai market report.
Oversupplying has been weighing on residential prices and rates in the emirate, the leading international real estate services firm indicated.
Dubai is expected to witness the delivery of 50,000 new units in 2019, surging by 150% from over 20,000 residential units in 2018, the report highlighted.
Nick Witty, managing director of Chestertons MENA, said: “As we anticipated, there were further sales price declines in Q3 for both apartments and villas due to excess supply and muted economic growth. The rental market proved to be more resilient however, with a marked slowdown in the rate of decline.”
“We anticipate the 10-year residency visa, the economic stimulus package and perhaps, more importantly, the introduction of the new Real Estate Committee, which has the mandate to boost demand and control supply, contributing to a more favourable outlook in Q1 2020,” Witty added.
The average villa prices stood below 3% in Q3-19, while apartment prices saw a decrease of 4% as compared to the previous quarter, Chestertons MENA pointed out.
In the villa market, prices at Meadows and Springs remained unchanged at AED 850 per square feet, while it eased by 2% at Palm Jumeirah to AED 1,927 per square feet.
Meanwhile, the highest decline was marked at Arabian Ranches at 5% to AED 793 per square feet in Q3-19.
Prices at both The Lakes and Jumeirah Park fell by 3% to AED 1,010 per square feet and AED 804 per square feet, respectively, during the July-September period of 2019.
“The supply of brand-new properties, with their wealth of amenities, has resulted in older communities bearing the brunt with prices being lowered to compete for and attract end-users,” Witty said.
At the level of the apartment sales market, Dubai Marina and the Greens were the best performing communities as both had pronounced declines of 6% to AED 1,030 per square feet and AED 849 per square feet each.
In the rental market, numerous apartment communities had no movement during the three-month ended 30 September 2019 including Business Bay, Discovery Gardens, Dubai Silicon Oasis, JVC, and Motor City where a two-bedroom apartment in each rent for AED 100,000, AED 75,000, AED 60,000, AED 73,000, and AED 90,000 per annum, respectively.
“The decrease in rental prices in smaller units, in some locations, is indicative of tenants moving to larger properties that have become more affordable. This has resulted in landlords of smaller units reducing their rates to be more attractive to prospective tenants,” Witty remarked.
JVT and Victory Heights have witnessed the biggest villa rental declines with an average decrease rate of 3% with a three-bedroom available for AED 112,500 and AED 130,000, respectively, the report added.
Off-plan transactions valued at AED 10.48 billion in Q3-19, as its volume jumped by 45%, which is an indicator of recovery, the report noted.
